The UK has been overtaken by countries such as Denmark, which has won half of the global market in wind turbines. Photograph: Christopher Furlong/Getty Images

After a flurry of environment announcements this week, how are Department of Energy and Climate Change ministers turning their talk into action? The answer is a sorry tale of legislative delays, policy confusion, ministerial splits and missed opportunities, at the exact time British firms are straining at the leash to build green business.

This sclerosis at the heart of government is a product of clashes between Tory and Liberal Democrat ministers. It's a story of a weak secretary of state unable to shift an adamantine Treasury. The tragedy is that the opportunity is being squandered for some of Britain's most innovative companies to grow and become world-beating firms.

The Aldersgate Group, an alliance of business leaders driving action for a sustainable economy, suggests that "the UK is losing momentum in the green economy race and there is only a small window of opportunity to assert leadership in the years ahead."

The group's report, Greening the Economy, released last week, warns ministers that "just incremental greening will not do. A re-packaging of existing measures or reluctance for bold action excused by current financial constraints will spectacularly miss the point".

But instead of ministers helping Britain's green firms to global dominance, they are skewing the market in favour of their overseas competitors.

A firm like Eco Environments Ltd, which has its base on Merseyside, supplies domestic and small-scale solar panels and wind turbines, and needs a stable platform for growth. Or OVESCo, an industrial and provident society in East Sussex which provides sun, sea, wind, water and biomass energy to local schemes that rely on feed-in tariffs to survive as a business. Uncertainty over the "feed-in tariffs", currently being reviewed by DECC, is paralysing for such firms.

Take the wind sector. The UK has been overtaken by countries such as Denmark, which has won half of the global market in wind turbines, worth annual revenues to the Danish exchequer of £2.7bn. Danish citizens are encouraged to invest in wind turbine co-operatives. No such level of support exists in the UK, which is why we lag behind.

Only active government can shape markets, create new ones, and create green growth. Individuals and businesses cannot do it alone: they need a government by their side. That's why the Labour government introduced the Climate Change Act in 2008 to enshrine carbon targets in law, and to move Britain from a high-carbon to a low-carbon economy. We planned to achieve 40% low-carbon electricity by 2020, and to create 400,000 new jobs in green businesses.

This government inherited a range of green initiatives, such as the green investment bank, which they've watered-down, or punted into the long grass. The Tory-led government's blinkered focus on the deficit means they are not making the right strategic decisions for now or for the next generation. Their promised green economy road map will appear many months after the publication of their energy bill.

They've pulled the funding for the Industrial Energy Efficiency Accelerator (IEEA) scheme, which helps industrial firms green their processes and cut energy use. The cross-government carbon plan, as Michael Jacobs, the former adviser to Gordon Brown, pointed out this week, contains little that is new. Nearly all of the 130 actions are things the government was doing already. The renewable heat incentive is a welcome scheme as far as it goes. But why will householders have to wait until October 2012 to receive the subsidy?

Business leaders tell me again and again that they have the products and potential markets, that they can often attract high levels of private investment, but that government policy is strangling their growth. Ten months into their jobs, and ministers are displaying a tragic lack of ambition. They cannot afford to take their foot off the gas.

• Luciana Berger is shadow climate change minister

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